Smartphone maker Xiaomi’s weak HK debut casts shadow on tech listings

Xiaomi's shares open 2.9% down on debut in Hong Kong

Cecil Davis
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09 July, 2018, 19:39

"The market is really concerned about how much growth Xiaomi can generate in 2019, and whether the company can deliver" on what it pitched to investors, said Hao Hong, chief strategist at Hong Kong-based broker BOCOM International.

One of the tech world's most hotly anticipated stock market listings made a lacklustre start to trading amid concerns of a trade war and the valuation of the company. The stock opened at HK$16.60, below the list price of HK$17, and it quickly fell to HK$16 before later recovering.

"At this critical moment in Sino-US trade relations, the global capital markets are in constant flux", he said.

The IPO pricing valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half its original $100 billion ambition earlier this year.

By contrast, China Literature Ltd, the e-book arm of Tencent Holdings, late previous year raised $1.1 billion in its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed.

Xiaomi's IPO had been expected to raise up to $10 billion, split between a Hong Kong and a mainland offering, which was postponed last month in a surprise move.

Founded in 2010, Xiaomi was the fifth biggest smartphone maker in the world a year ago, according to research firm IDC.

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